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Among Top Four Internet Companies, Is Apple Most Vulnerable?

The four top Internet companies–Google, Facebook, Amazon and Apple–are constantly clashing with each other today. Each of the “Fantastic Four” has its own strengths and weaknesses and each is jumping into competitors’ territories.

But which company is the most vulnerable in today’s quickly changing market? None other than Apple, according to one panelist speaking at the Techonomy conference. Despite Apple’s massive market cap and blockbuster products, it’s the most vulnerable because it has to constantly maintain its innovation advantage in hardware to keep consumers coming back, said Alec Ellison, chairman of investment banking at Jefferies. In terms of “stickiness,” Apple doesn’t have as many hooks to keep consumers coming back, he said. “Stickiness is key. If you look at those three, Apple I think is the weakest from a stickiness perspective. It has the most valuable brand, but it has to maintain the innovation edge to continue its position in the marketplace.” (Jeffries has buy ratings on all four companies, Ellison noted, though his analysis was his own view.)

Ellison also said Apple’s retail stores, which have been a source of strength in showing consumers the Apple experience, could become a source of weakness and an “albatross” in the future. He said the stores could become like Disney stores, which were popular but became a drag after people stopped visiting them.

Facebook, meanwhile, has questions over the quality of its management team, said Mark Mahaney, formerly an analyst at Citi. He said Techonomy’s David Kirkpatrick knows Facebook CEO Mark Zuckerberg better than anyone else. Investors do not know Zuckerberg or the management team very well. “David (Kirkpatrick) spent more time with Mark Zuckerberg than anybody else has. That’s a bit of a problem.” It will take a while, just as it did with Steve Jobs or Jeff Bezos for Facebook’s management team to prove themselves, Mahaney said.

Facebook also hasn’t invested enough in mobile and it was late with its iPad app, Mahaney said, citing Facebook’s admission that it made mistakes in its mobile development. “Facebook’s margins are too high. They need to be much more into investment mode,” Mahaney said.

Google has the most data on users and Facebook may be second in that category. But Amazon has the most “interesting commercial data,” Mahaney says. “They have the richest set of data on consumers, I think,” Mahaney said. “That to me will be the database winner over the next 5 to 10 years.” That gives Amazon a powerful defense in the future.

Video is the next big battleground for these companies, and the winner will be determined by who gets the most compelling video content, said Steve Hasker, president at Nielsen. In addition those that can reach the hardest-to-reach audiences will have an advantage, he said.

For startups it’s hard to directly challenge Facebook, Amazon or Google, which each have “very deep competitive moats” around their businesses, Mahaney said. Facebook has strong network effects, Google has spent more than $20 billion perfecting its search engine and Amazon has spent years establishing its distribution and retail network. They could create a vertical in ecommerce like Fab.com or smaller verticals in search, Mahaney said.

Even though these four companies are powerful, there will definitely be a disruptive company to break into this group in the next five years, Mahaney said. It could even be a company from outside the U.S. such as Tencent, he said.

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It is as hard to see how you could displace FaceBook as it is to see how FaceBook can make money.

With a trailing 12 month P/E of 2800 and reporting practices that make it impossible to see where the megre profit comes from and where the costs go, Amazons share price could and probably should collapse to 1/200th of what it is today. I wonder how investors feel about losing 99.5% of their investment.

Apple alone is a real business with a real and solid business model and an inherent stickiness with customers, and priced to be good value at its current size, while continuing to grow.

Absolutely true on all counts. Why is it that Apple and only Apple are required to have not just new products but mind-blowing, iPhone or iPad level conquests with every product? The truth is they don’t but WS and the tech ‘industry’ (what little there is beyond the not-so-fast followers in Redmond) is hugely threatened by Apple. (and a lot of dimwits like the ‘preaky’ one below).

WS just appreciates Amazon because they can understand it. Most of the analysts on WS are lost outside of watching a ticker. They think they are big users of technology, but honestly most have no idea what is going on with regard to hardware or software.

IT and ‘technologists’ are Microsoft’s true customers. This model worked for awhile, when it was OK to have to rely on someone else to ‘help’ you constantly with the computer OS (windows) that was never designed to be useable in the first place. (only that IT could control it more than you can).

The average person on the street sees this already. And those that have already moved to Mac or iOS will never want to go back.

Your Premise is completely STUPID! This is like comparing Bananas, Oranges, Rotten Apples and Kumquats.

Google is PRIMARILY a Internet Search Engine, with Cloud, Telephony and an App store to support some hardware.

CrApple ONLY has iTunes store and virtually nothing else since iCLOD, like all it’s iPredecessors, is a FLOP. CrApple is essentially a Chinese Gadget Company.

Amazon IS the only Internet BUSINESS with an only recently added Cloud service.

Farsebook is a Vanity PORTAL, with no store sales or hard products.

You tell us how they are remotely a parallel? Google and Amazon are the ONLY REAL “Internet Businesses” because they evolved from the Internet and ARE MAKING MONEY PRIMARILY off the Internet. CrApple could easily survive without any Internet “business”; and WE ALL can happily survive without Farsebook that has NO “Internet Business = Product Income”.

CrApple’s “killer (money) app” is over-priced Chinese iPhony’s and iFADs, not the iTunes Music store any more.